Wednesday, April 16, 2008

The $ Plumbs New Low

Even a U.S. Dollar "Bear" like me thought that the dollar would get some relief.  Perhaps it is not to be.

Crude oil prices are soaring.  Higher oil puts pressure on the $ with its concomitant increase in the US Trade Deficit, as the $ falls it pressures oil prices higher in $ terms, which, in turn, puts further pressure on the $...

I thought the ECB would have cut in the next 90 days or so, supporting the $.  Perhaps I am wrong, and the Europeans have decided that they would rather be able to buy oil than sell chachka's to the US.  

Menatt (at) yahoo (d0t) com


admin said...

I've read alot of commentary that his is related to the excess liquity injected by the Fed - upon which financial house see commodities as a way of parking the fund to garner some gains. So oil, metals, food are not so much inflating in price but are the only safe haven compared to stocks bonds, etc. What is your take on it?

Greg T. Jeffers said...

We have been using stores of value as medium of exchange since before "The Flood".

Financial assets are at real risk from declining credit availability. That appears to be the environment we are in. I am primarily in commodities, ag land and equities of commodity benefitting companies.